Loan interest

Querist : Anonymous (Querist) 07 January 2012 This query is : Resolved
Q.
Loan given to partnership firm by partner's friend without charge any interest.What is liabilities of both of party as per income tax or other laws.
thanxs..

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A V Vishal (Expert) 07 January 2012
There is no liability to both the parties

ajay sethi (Expert) 07 January 2012
if the freind has not charged any interest on interest free loan where is the liabilty to pay tax ?

Raj Kumar Makkad (Expert) 07 January 2012
Liability of tax might have been fetched upon the loanee only if he might have derived income by way of interest.

soumitra basu (Expert) 08 January 2012
The assessing officer may ask question what is the interest of the friend to give loan whereas he could earn interst by investing the same in bank.

Sailesh Kumar Shah (Expert) 08 January 2012
I have similar views as Mr.Basu.

prabhakar singh (Expert) 08 January 2012
Mr.Basu seems to rightly have entered into mind of AO who may in all probability question the transaction as doubtful and sham.

Querist : Anonymous (Querist) 09 January 2012
Thank u respected all and special thanks to Mr.Basu for corner point suggestion.

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